Budget 2021: Corporate tax amendments

Finance Minister Tito Mboweni delivered his third annual budget address on 24 February 2021. The corporate tax rate reduction from 28% to 27% for years of assessment commencing on or after 1 April 2022 was arguably the most significant windfall for corporate taxpayers, although the actual cash benefits thereof will only be seen in the 2023 calendar year. Below, we highlight some of the other significant proposals, which will likely be contained in the Draft Taxation Laws Amendment Bill to be published for public comment in June or July this year.

Refining the interaction between antivalue shifting rules and corporate reorganisation rules

The Income Tax Act curbs the use of structures that shift value between taxpayers free of tax. The anti-value shifting rules apply to transactions involving asset‐for‐share exchanges. Asset‐for‐shares base cost rules prescribe that a base cost for assets acquired by a company in exchange for its shares should be equal to the sum of the market value of the shares it issued and the amount of the capital gain triggered by the application of the anti‐value shifting rule to ensure that there is no double taxation on the future disposal of the assets.

Clarifying the interaction between early disposal antiavoidance rules and degrouping antiavoidance rules in intragroup transactions

In addition to the early disposal anti‐avoidance rules outlined above, the intra‐group transaction rules contain de‐grouping anti‐avoidance rules, which apply when the acquirer and the party disposing of an asset in terms of an intra‐group transaction cease to form part of the same group of companies within six years of the transaction. The de‐grouping anti‐avoidance rules apply to reverse the tax benefit that was obtained in terms of the intra‐group transaction by triggering the greatest capital gain, gross income, or taxable income that would have arisen between the date of the intra‐group transaction and the date of de‐grouping. Because both of these anti‐avoidance rules apply to reverse the deferred tax benefit of an intra‐group transaction, it is proposed that changes be made to the tax legislation so that if one of the anti‐avoidance rules applies in respect of an asset, the other will not subsequently apply.

Reviewing the venture capital company tax incentive regime

National Treasury has determined that the incentive has not adequately achieved its objectives. The incentive has instead provided a generous tax deduction to wealthy taxpayers and most support has gone to low-risk ventures that would have attracted funding without the incentive. The incentive will therefore not be extended beyond its current sunset date of 30 June 2021.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

Test your knowledge on cybersecurity

How well are you equipped for handling cyber threats to your business? Take the quiz below to test your knowledge on cybersecurity.

  1. You just received an email from a client telling you to attend to an urgent financial matter with a link to help you.

Do you… ?

a.) Click the link provided to sort out the problem as quickly as possible.

b.) Delete the email because all emails like these are scams.

c.) Carefully assess the sender address and content, and contact the sender via a previously used channel.

There are many cybercriminals out there who are intent on gaining access to company secrets and sensitive information. Whenever an email reflects a sense of urgency and demands immediate action, it is usually a good time to pause and assess all the facts. Fraudsters are known to use seemingly legitimate addresses that mimic real email addresses to lure individuals into clicking malicious links and giving away sensitive information. Whenever you receive an email with an unsolicited link or that presents itself with great urgency, it is best to contact the sender through a known channel to ascertain whether or not their request is legitimate (most of the time it will not be). Be vigilant to avoid this kind of cybercrime known as ‘phishing’.

  1. strange popup just came onto your browser window.

Do you … ?

a.) Reach for the“X” (close)button and click it as quickly as you can.

b.) Inspect the pop-up without clicking anything, and exit the website if the pop-up is unexpected.

c.) Just click accept because you don’t believe that pop-ups can harm your computer.

There are many websites that run scripts that are malicious or have the potential to be malicious. While it may feel instinctual to just reach for the first sign of an exit button, be wary not to click on a malicious link. Many illegitimate and fraudulent ads, pop-ups, and notifications exist on the web that mimic legitimate messages. Always inspect a pop-up and if it is unexpected (especially if it relates a sense of urgency) it may be best to exit the website altogether. Many aids, such as anti-virus and anti-malware software, exist to help users identify bad or potentially hazardous sites.

  1. You’re setting up a new computer and new accounts for an employee.

Do you … ?

a.) Only install the operating system, and give your employee easy to remember passwords like 123CompanyName and trust the basic pre-set antivirus software

b.) Set up the computer with all relevant software, already-strong passwords, and premium security software?

Whenever you set up a computer for an employee or set up new accounts for your employees, it may be tempting to simplify the process. However, making sure that you uphold a high level of security from the start is vital to ensure maximum protection. Set up new accounts with strong passwords that cannot be easily guessed and contain an array of lowercase, uppercase, numeric, and special characters. While pre-set antivirus programs like Windows Defender are not completely useless, they cannot provide the same level of security that dedicated anti-virus software can.

  1. You’re working away from home and find yourself seated in a coffee shop.

Do you … ?

a.) Connect upto your own mobile router because you think that is the safest option

b.) Connect to the first available open Wi-Fi network with a name like FREE WIFI

c.) Use a VPN before connecting to any network in the public space

d.) Buy a coffee and just people-watch because you can’t work safely from a coffee shop

Open Wi-Fi networks are extremely dangerous as they have no protocols in place to prevent anyone from reading the data shared on the network. It is not advisable to connect to an open network, and where open networks are used, make sure that they are legitimate (in the scenario above, you might ask a waiter for the coffeeshop’s Wi-Fi name and password – if the Wi-Fi is password protected) and use a VPN program to encrypt the data sent from and to your device. It should be noted that although VPNs are largely effective in hiding data from cybercriminals, it is not a failsafe as there may be delays in the connection between the network and connection to the VPN (in which your details could be briefly exposed). It is always best to use a trusted network.

  1. A new employee has just joined your company.

Do you … ?

a.) Educate them on things to look out for online and teach them to practice online safety

b.) Let them read through a policy and hope they understand the security measures that you have in place

c.) Trust them to know good security practices because their generation knows internet security a lot better

Proper cyber-security in your business relies on adequate training and retraining — regardless of age and experience, you cannot rely on the new employee to be aware of all the security threats that your business may face. While online safety policies may provide guidance and give you a method of keeping employees accountable for digital safety, it doesn’t physically provide that safety. Always keep educating and retraining your employees (even established ones) on cybersecurity practices, thereby establishing a company-wide reverence for digital security best practice.

  1. Your employee does not have a personal computer and wants to use their work device for personal purposes.

Do you … ?

a.) Tell them that the device is only for work purposes and is not to be used for personal tasks, leaving them disappointed

b.) Avoid being a spoilsport and let them go to town with the device

c.) Tell them that it’s okay to use it for personal tasks as long as they take strict security measures

Even if you want to exude a ‘cool’ attitude and have your employees like you, letting them use work devices for personal use is highly irresponsible. If you do not set strict boundaries regarding the use of company assets, you open up yourself and your data to a world of unnecessary risk. Even if you have the utmost faith in your employees, you should always designate company devices for strictly professional work. You may also want to add administrator privileges to ensure that your employees are unable to install/uninstall any software that you have not authorised.

[Answer key: 1.c, 2.b, 3.b, 4.a (or c), 5.c, 6.a]

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

Why do I need to know my rights as taxpayer?

Since the introduction of the Tax Administration Act in 2011, which aimed to consolidate most of the administrative matters in tax acts, taxpayers have become ever more aware of their rights in dealing with the South African Revenue Service (SARS). There has also been a significant increase in the number of cases in the Tax Court (as well as in our High Courts) that relate not to substantive tax matters, but rather to the exercise of taxpayers’ rights. We briefly highlight below some of the rights that taxpayers have in terms of the Tax Administration Act, and which they may wish to enforce at some stage.

  • You are entitled to receive reasons for any assessment that SARS raises and any taxes it imposes. Therefore, SARS is not allowed to simply raise assessments without giving you (when called on in terms of the dispute resolution rules) a full understanding of their justification and their interpretation of the law, which underlies the specific matter.
  • SARS is not allowed to appoint a third party to deduct money from your account (for example, a bank) without providing you with the proper notice at least ten days in advance, as well as providing you with remedies to address the matter.
  • SARS is not entitled to divulge your information (except as required by law) to any third parties.
  • Provided that your returns were free of material deficiencies, SARS must pay interest on delayed VAT refunds. This is a matter that is often overlooked in practice since taxpayers are all too happy to receive the actual VAT amount – do not forget about your interest!
  • SARS must provide you with a tax clearance certificate within 21 business days after the submission of an application. More and more institutions require the issuance of tax clearance certificates for general business purposes.

Although taxpayers have many rights afforded to them, one often finds a practical challenge in exercising those rights. The legislation provides for relief in certain circumstances but does not prescribe a form and manner in which taxpayers must utilise that relief (for example, an application for a reduced assessment where there has been an undisputed factual error). Although the law provides for relief, the Act does not prescribe how that relief must be exercised.

This is one of the clear shortcomings within our system of tax administration and one hopes that in due course, National Treasury and the Minister of Finance will identify these fallibilities as a systemic issue within the administration of our tax system, in order to approach the Tax Ombud to make recommendations on how taxpayers can exercise their rights afforded to them daily.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

Navigating the real estate market in 2021

Many industries are piecing things back together again this year, as they try to recover from the effects of the pandemic or recreate themselves to remain relevant in a changing world. One industry that has been left unaffected to a great extent, and yet has had to re-create itself almost entirely in the same breath, is the real estate industry. As 2021 sets off, it’s important to understand just how the industry will shift gears in the months to come.

The biggest factor that will influence the industry is the fact that the public is in need of more guidance and advice than before. The uncertainty that still surrounds the economic landscape and the future of the world as it battles COVID-19 means that people are more cautious when it comes making real estate and investment choices. The role of property practitioners is thus more vital than ever in supporting the public through this period of recovery.

Property practitioners have a tough task ahead of them as they provide the public with confidence in their decisions, while also helping grow the market again so that that confidence is not misplaced. A vital part of this process, beyond the elbow grease and hard work that is already going into recuperating the industry, is the building of strong relationships with clients. Property practitioners may have acted as a “middle man” of sorts in many instances in the past, but their roles are being redefined as they provide more and more tailored services to those who are navigating the real estate landscape.

With the past year obliging so many industries to re-evaluate their way of doing business, the real estate industry has also sought out more streamlined solutions that put less strain on property practitioners while offering the public more efficient service. A big role player in this process is the adoption of Customer Relationship Management systems that allow property practitioners to enhance the way they interact with both existing and prospective clientele. This is especially of use when it comes to the rental market, where a rotating roster of clients needs to be connected with.

As a result of the continuing uncertainty and the weakness of the economy, the rental market is proving to be one of the most greatly affected. Where tenants are able to, 2021 will most likely find them choosing to continue renting where they currently are, opting for safety above prospects. Unfortunately, vacant rental properties could remain vacant for quite some time still as a result. This may be even more true for properties at the lower end of the price spectrum, as lower-income individuals have been some of the worst affected by the lockdown and TERS relief coming to an end.

As more and more tenants conduct research regarding their financial futures, many may also realise their rental amounts are almost the same as bond repayments would be, leading them to reconsider the possibility of becoming homeowners and bringing stability to their lives amid the storm. As more South Africans re-evaluate their futures, with considerations such as work-from-home options becoming more prevalent, many people are looking for homes that will better suit their changed lives, and renting may simply no longer be the answer to those plans.

All of this cements the necessity for property practitioners’ role in the months to come. If it is time for you to alter your real estate situation, enlist the guidance and advice of a trusted property practitioner to help you navigate whatever comes next.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

Healthy minds, healthier remote workers

It’s a strange new world that we’re living in, one in which the digitalisation of the traditional office is happening at a rapid rate. Many businesses are reaping the benefits of remote work in a society where going into the office no longer seems necessary (not to mention that it could present an array of health dangers).

It’s not all moonshine and roses, though. Some of the biggest challenges for businesses who have opted to experiment with remote work (or even implement it permanently) include managing productivity and cultivating corporate culture from a distance. There are, fortunately, a wide range of strategies that you can adopt to improve remote productivity while maintaining and growing a corporate culture.

Establish the basic productivity/communication tools

Using only email as a channel of communication in today’s corporate/commercial climate won’t cut it anymore. Encouraging better remote work relies on alternatives to the channels that make office-based work easy.

This means that you will need to make use of the following:

Project management tools – This provides an alternative to the standard to-do-list and constant check-ins about project progress. Not only are many of these tools great for online work, but we also find it difficult to believe that in-office work won’t benefit from such tools. If you can track the work being done by your employees, you can also be ready to jump in and help them if something seems amiss.

Instant messaging tools – You will need an alternative to turning your chair around and chatting to your colleagues, which makes instant messaging so attractive. Need to ask a quick-fire question to your used-to-be office neighbour? Just ping them a message.

Video calling applications – Out of the office you no longer possess the ease of access to a boardroom, which means that your meetings must be held virtually (no, not all meetings could have been an email). We are social creatures after all, so take advantage of the video functionality to ensure your employees don’t become faceless—that’s a big no-no for creating a strong company culture while working remotely.

Make sure to prioritise employee wellbeing

One thing that a worldwide pandemic has taught us is that remote work can be lonesome work. While many everyday workers have found their time away from an office-setting a lonely affair, it is hardly an unavoidable situation. There are a few ways in which you can improve your employees’ relationships towards one another—yes, we’re talking real interpersonal connection—and yourself even within a remote work setting:

Make check-ins a thing

One sure-fire way to protect against the onset of remote work isolationism is to check up on your employees without making it about work. Find out how they’re doing, what they’re reading, eating, listening to, enjoying, and what they feel anxious about. It is tempting to just let your employees continue their day-to-day activities with minimal contact, but there are better alternatives. Check-ins make your relationships personal and indicate that you care.

Go team-building

Once the pandemic subsides (and granted your remote workforce isn’t scattered across the globe) you might want to go run an obstacle course to encourage teamwork, but until then, it remains possible to do teamwork exercises and create a tangible company culture by digital means. Try your hands at a virtual escape room, play digital boardgames, host a trivia night. The possibilities are numerous and help your team become more comfortable with each other, reminding them that the people they work with are also worth getting to know.

Encourage productive spaces and productive mindsets

Take a moment right now to sit/stand up straight. Done? Puff up your chest ever so slightly. put your hands on your waist and put on a smile (even if you have to force it). Did you feel anything? A boost of confidence perhaps? Did your fake smile perhaps turn into a real one? There are a lot of psychological ‘life-hacks’ that can help you maintain a positive attitude. The same can be done to make remote work more welcoming for a productive mindset.

Encourage dedicated workspaces

Have you ever tried to commit to a whole day of working out of the bed? Was it a struggle to stay productive? Your environment has a massive effect on your levels of productivity. Make sure to encourage your staff to set aside a space specifically for work in their homes. If they can dedicate an entire room to work, there may even be tax-benefits for them if you encourage this practice. Speak to your tax adviser to see how it can be done and how you can help your staff out.

Dress for the job

It can be easy to get stuck in your pyjamas for the entire day if no-one is watching, but once again it does not have a positive psychological impact on your levels of productivity. Encourage your staff to dress appropriately for work and encourage good hygiene. These basic tasks can have a long-lasting impact on the mindset of your employees.

If you are able to implement all these tips and give your employees a feeling of satisfaction in their remote work while encouraging productivity, you stand in good stead to cultivate better people doing better work.


This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

1 2 3 4 5 28